Bankruptcy trial verdict due Monday

SACRAMENTO – Attorneys in Stockton’s bankruptcy are poised to deliver closing arguments this afternoon with the judge’s oral ruling to follow Monday.

Scott Smith

SACRAMENTO – Attorneys in Stockton’s bankruptcy are poised to deliver closing arguments this afternoon with the judge’s oral ruling to follow Monday.

That’s when U.S. Bankruptcy Judge Christopher Klein is expected to decide if Stockton is eligible for Chapter 9 protection in the face of millions of dollars worth of long term debt. Wall Street creditors stridently oppose Stockton.

Today marked the third day of the trial that began Monday. Stockton Councilwoman Kathy Miller took the witness stand, and an attorney for the city’s creditors declared a hostile witness, allowing him to ask leading questions.

The question and answer exchange between Miller and attorney Guy Neal, who represents Assured Guaranty Corp, was not hostile. Rather, it focused largely on a series of videos she published to Youtube, explaining the reason Stockton voted to file bankruptcy June 28.

Miller said she made the videos that went online in early July in response to a flood of questions she had taken from local residents and because she was running for re-election.

Miller also explained why she used the phrase “half baked” to describe Mayor Anthony Silva’s half-cent tax proposal to hire more police. She proposes a comprehensive recovery plan for Stockton that considers libraries and after-school activities in addition to police services.

“I think there’s more to a city’s health than just police officers on the street,” Miller said. “I think it’s a bigger picture.”

If Judge Klein grants Stockton access to bankruptcy court, the city will next file a so-called plan of adjustment, which restructures the city’s debts to bond holders and formalizes officials move to phase out payments to the health care coverage of retired city employees.

Convincing the judge to confirm the plan of adjustment is expected to draw an even bigger fight from creditors, who contend that the city needs to reduce its pension payments managed by the California Public Employees’ Retirement System.

Today in court, Judge Klein said that, before giving his oral ruling on Stockton’s eligibility, he needs some time after the attorneys’ closing arguments to read thousands of pages in documents forming the foundation of this week’s trial.

“To lift them all, I would probably have to be able to bench press 300 pounds,” he said. “Suffice it to say, I’m left with some weighty evidence.”

After Monday’s oral ruling, the judge said he will produce a written ruling, refining his initial decision.

Read Thursday’s Record for more of this story by Staff Writer Scott Smith.